Value Investing Diwali 2017 stock picks

#1
I had first learned about value investing through Einstein's thread.

I am starting off my financial markets career and thought I'd spread the word about myself by sharing my stockpicks for Diwali 2017 in the following spreadsheet:
https://docs.google.com/spreadsheets/d/1fInE0-wJXQ0p9vWYYc5ePyuWyzBDd5bMpxEtVFRWgX8/edit?usp=sharing

The spread sheet updates the performance live. The stocks are equally weighted with the stock with my highest conviction (actually best financial ratios) on top.

Maithan Alloys
Bhageria Industries
Chamanlal Setia Exports
HCL Tech
EClerx
Skipper
Vikas Ecotech
 
Last edited:
#2
You can take a look at these stocks which are good for Diwali

ICICI Prudential Life Insurance
ICICI Prudential Life Insurance (ICICI Pru) is the largest private sector life insurer in India. ICICI Pru is a joint venture between ICICI Bank and Prudential Corporation Holdings. We estimate ICICI Pru to deliver ~26% CAGR in value of new business (VNB) over FY17-19E supported by 14% CAGR in NBP (new business premium) and 390 bps increase in VNB margins. Embedded Value (EV) will likely grow at ~11% CAGR over FY17-19E. Return on Embedded Value (ROEV) should remain robust at 14-16.5% over the medium term. The company has strong financials and a healthy balance sheet. Its persistency ratio and solvency ratio are higher than peers. We expect an upside of 20% from CMP of Rs 403 over a period of 1 year.

Financials


Rs cr
Net Premium Income


VNB Margins (%)

EPS (Rs)

EPS growth %

P/EV (x)

RoE (%)

RoEV (%)

FY18E

26,400

12.0

11.7

0.0

2.3

24.3

14.0

FY19E

31,200

13.0

13.5

15.4

2.0

24.1

14.8

Source: 5paisa Research

Century Plyboard
Century Plyboard (CPBI) is India’s leading plywood manufacturing company with 25% market share in the organized market. It is also the 3rd largest manufacturer of laminates with 12% market share after Greenply and Merino. We expect revenue CAGR of 15% over FY17-FY19E on account of capacity expansion in laminates and foray into MDF segment. CPBI MDF is likely to commence operations from Q2FY18E and is expected to contribute incremental revenue of ~Rs 320 cr in FY19E. Further, Government’s focus on building smart cities, affordable housing under PMAY is a positive trigger. We expect EBITDA CAGR 23% of over FY17-FY19E on account of entry in the high margin MDF segment and capacity expansion. GST will be a game changer for the organized sector/company. We expect PAT CAGR of 24% over FY17-FY19E. We expect an upside of 25% from CMP of Rs 264 over next 12 months.

Financials


Rs cr
Revenue


EBITDA margin %

EPS (Rs)

P/E (x)

ROE (%)

ROCE (%)

FY18E

2,256

17.6

10.5

24.1

25.6

23.3

FY19E

2,595

18.4

13.0

19.4

24.9

25.0

Source: 5paisa Research

Interglobe Aviation
Interglobe Aviation (Indigo) is a low-cost carrier with the largest domestic market share of ~38% as of Aug’17. Its fleet of135 aircrafts is the largest in India with outstanding orders to purchase 400 new aircrafts by 2025. Its 87% revenue comes from passenger segment (91% domestic & 9% international) and rest from ancillary and cargo segment as of FY17. InterGlobe is transforming strategically which includes shifting from pure sale and leaseback models to buying aircrafts, increasing focus on regional routes (inducting ATRs Vs single aircraft type) and targeting shorter term leases while the Neo engine issues are resolved. These are expected to aid market share gains for Indigo. The company has sufficient cash on the books of ~RS 8,000 Cr (post QIP @ Rs 1,130 per share) which should enable it to fund its fleet acquisitions. The bottom-line of the company has grown at 56% CAGR in the past 3 years. We expect an upside of 22% from CMP of Rs 1105 over next 12 months.

Financials


Rs Cr.
Revenue


Growth YoY

EBITDA Margin

EPS (`)

P/E (x)

P/ ABV (x)

ROE

FY18E

22,947

23.5

13.9

59.1

18.6

8.1

50.6

FY19E

28,490

24.2

14.0

76.7

14.4

7.0

52.4

Source: 5paisa Research

Ujjivan Financial Services
Ujjivan Financial Services (UFSL) is the third largest NBFC-MFI focused on serving the underpenetrated economically active poor segment. Its FY17 gross loan book stands at Rs 6,379 cr. The company is adequately capitalized for the next two years. We expect the overall loan growth of ~18% in FY18E and a CAGR of ~26% over FY17-19E. Incrementally, the focus will be on secured segments like housing and MSME, which are expected to grow from 3% of the loan book currently to one-third of the loan book by FY20E. UFSL has got the scheduled bank status approval which will allow it to raise deposits from big institutions like MF, insurance companies. Thus, we expect improvement in net interest margin by 140 bps over FY17-19E as cost of funds to go down by 230 bps over the similar period. We expect an upside of 20% from CMP of Rs 332 over next 12 months.

Financials


Rs cr
Net interest income


Pre-provision profit

EPS (Rs)

P/BV (x)

RoA (%)

RoE (%)

FY18E

7,471

2,818

1.5

2.5

0.2

1.0

FY19E

9,520

3,954

16.4

2.3

1.7

10.7

Source: 5paisa research

L&T Infotech
L&T Technology Services, a subsidiary of L&T, focuses purely on engineering research & development (ER&D). We expect 13% revenue USD CAGR on account of pickup in BFS spending as the regulatory norms soften. Additionally, LTI is also banking on its digital offerings in insurance which is gaining traction amongst clients and is expected to grow at ~9% USD CAGR (FY17-19E). BFSI contributes ~34% to total revenues. North America is still the key market (69% of revenues); the company is making investments in UK, Germany, and Switzerland to diversify its geographical risk. It has strong clientele base. The top 20 clients (68% of its revenues in FY17) have driven ~11% revenue USD CAGR over the past three years. We expect an upside of 22% from CMP of Rs 804 over next 12 months.

Financials


Rs Cr.
Revenue


EBITDA margin

EPS(`)

EPS Growth (%)

P/E (x)

ROE

ROCE

FY18E

6,956

17.9%

60.4

6.4

13.2

27.4%

28.3%

FY19E

7,582

17.8%

66.5

10.0

12.0

27.8%

28.6%

Source: 5paisa Research
 

Contra

Well-Known Member
#4
Maithan Alloys
Bhageria Industries
Chamanlal Setia Exports
HCL Tech
EClerx
Skipper
Vikas Ecotech
You may want to reconsider the choice of Eclerx as your IT pick. Personally, I like Sonata Software and it features prominently in my long term portfolio. Main reason is its strong dividend paying history, low PE, proactive management and higher chances of an upside in the IT space. It just adds good stability to a diversified portfolio. Of course, this is not a recommendation but just a suggestion.
 

niftyoption

Well-Known Member
#5
I had first learned about value investing through Einstein's thread.

I am starting off my financial markets career and thought I'd spread the word about myself by sharing my stockpicks for Diwali 2017 in the following spreadsheet:
https://docs.google.com/spreadsheets/d/1fInE0-wJXQ0p9vWYYc5ePyuWyzBDd5bMpxEtVFRWgX8/edit?usp=sharing

The spread sheet updates the performance live. The stocks are equally weighted with the stock with my highest conviction (actually best financial ratios) on top.

Maithan Alloys
Bhageria Industries
Chamanlal Setia Exports
HCL Tech
EClerx
Skipper
Vikas Ecotech
@ steveBayerIN ji ,

In your stock selection Maithan Alloys and chamanlal Setia Exports are in my portfolio
due to some reasons Bhageria and HCL Tech i filtered ....
in my view Indian stock market is costly ..... Nifty PE Ratio is 26.52
but not in a Euphoria state ....
some sectors like NBFC & Retail Sectors are in a Euphoria stages
in my view software stocks margins are slowing down , wait and watch is best in this sector....

in my view we find growth stocks in this market , but not value stocks at present because market PE Ratio showing some high levels
but your stock selection is good and those are low value stocks ... but always remember with these valuations growth combination is always best
Value + Growth combination stocks always perform well in my experience ....

that spreadsheets link in your post is not working .... if you dont mind recheck it , and post that spreadsheet in this thread ....

ALL THE BEST
 
#6
You may want to reconsider the choice of Eclerx as your IT pick. Personally, I like Sonata Software and it features prominently in my long term portfolio. Main reason is its strong dividend paying history, low PE, proactive management and higher chances of an upside in the IT space. It just adds good stability to a diversified portfolio. Of course, this is not a recommendation but just a suggestion.
Sonata's sales performance in 2012 and 2013 would have led my investing process to filter out the stock. The company seems to have stablized in 2015. I may enter this stock if the price drops but the fundamentals remain the same!
 
#7
@ steveBayerIN ji ,

In your stock selection Maithan Alloys and chamanlal Setia Exports are in my portfolio
due to some reasons Bhageria and HCL Tech i filtered ....
in my view Indian stock market is costly ..... Nifty PE Ratio is 26.52
but not in a Euphoria state ....
some sectors like NBFC & Retail Sectors are in a Euphoria stages
in my view software stocks margins are slowing down , wait and watch is best in this sector....

in my view we find growth stocks in this market , but not value stocks at present because market PE Ratio showing some high levels
but your stock selection is good and those are low value stocks ... but always remember with these valuations growth combination is always best
Value + Growth combination stocks always perform well in my experience ....

that spreadsheets link in your post is not working .... if you dont mind recheck it , and post that spreadsheet in this thread ....

ALL THE BEST
I am intentionally buying low value stocks with a margin of safety that have had some long term growth behind them. It is difficult for me at this time to know for certain which companies will have high growth for certain in the future so I'm using the margin of safety rule strictly!

I checked out the spreadsheet in internet explorer without sigining in to Google and it works, check now:
https://docs.google.com/spreadsheets/d/1fInE0-wJXQ0p9vWYYc5ePyuWyzBDd5bMpxEtVFRWgX8/edit?usp=sharing
 

amar_gr

Active Member
#10

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